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February 2010 Archives

Out Like a Lamb?

In Shakespeare’s Julius Caesar, Caesar is warned to “beware the Ides of March.”

Lawsuit a Turkey?

This one is for the birds… (we can’t make this stuff up!). According to an article in the Beaufort (SC) Gazette, two Hilton Head siblings were recently awarded $4.25M in a pet turkey lawsuit:

What began as a dispute between neighbors about pet turkeys ended Friday when a Beaufort County jury awarded two Hilton Head Island siblings $4.25 million in damages.

Keys to the Citi

CitiMortgage has launched a pilot program that will allow distressed mortgage holders to stay in their home an additional six months in return for turning the keys over to the mortgage lending giant at the end of that period.

947,000 HAMPy Campers

The Wall Street Journal reported this week on the HAMP ramp-up, noting that the number of households benefiting from the Home Affordable Modification Program (HAMP) was up 11% in January and that, overall, about 947,000 households have taken advantage of the government’s foreclosure prevention program.

A Pony in the Pile

From the hallowed pages of the Washington Post came news this week that home equity is on the rise.

HUD Targets Lenders

HUD Commissioner David H. Stevens announced a new initiative this week that focuses on mortgage companies with significant claims against the FHA mortgage insurance program, issuing 15 subpoenas to mortgage lenders across the country demanding documentation on failed loans that resulted in claims paid by the FHA insurance fund.

Strip Tease

…or how to get rid of the underwater second mortgage, from a recent Ezine article by David Reinholtz, founder of LoanOfficerSchool.com, a speaker and an approved education provider for NMLS:

One day Suzie homeowner reviews her personal finances and comes to a stomach-churning realization: the house that she has lived in and made payments on and invested with her dreams is worth less than her total mortgage debt. She is deeply "underwater." Her financial situation is serious enough so that she contemplates Chapter 13 bankruptcy. But in reviewing her options, her attorney tells her about something called "second lien strip." Resisting the urge to slap him across the face at this seemingly risqué suggestion, she listens. He outlines a scenario.

Thanks But No Thanks

The federal regulator for Freddie Mac and Fannie Mae told the mortgage finance giants “thanks, but no thanks” to generating new loan products – at least while they are under the control of the U.S. government.

Walk-or Swim-Away?

A recent New York Times article reported succinctly on the growing trend of homeowners who are “underwater” on their mortgages simply packing it in and walking away. Called “a situation without precedent in the modern era,” abandoned homes are becoming more prevalent as “people’s emotional attachment to their property is melting into thin air.”

Hotels: LOTS of Vacancies

Hotels are becoming one of the biggest bargains in the CRE industry right now, at least in northern California. This week, the Sheraton Pleasanton Hotel was purchased by a partnership of realty investment firms Sethi Enterprises and Kapoor Enterprises.

A Gift That Keeps Giving

Many banks suspended their foreclosure activities in December for the holidays (can’t have Tiny Tim in the street at Christmas….let’s wait until January!). So it wasn’t unexpected to see the December foreclosure rate decline.

Tough (and Expensive) Talk

Real estate agents and talking on the phone while driving go together like milk and cookies. Just be sure California doesn’t turn it into sour milk!

FHA Policy Update

The FHA has announced a number of policy changes “to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.”

From the HAMP Camp

The government continues to struggle to put together a loan modification program that will work for both the homeowner and the lender. According to a recent announcement by HUD and the U.S. Department of the Treasury, new provisions to the mortgage modification program (HAMP-Home Affordable Modification Program) that will speed the process will go into effect on June 1, 2010 and include:

About REOs: Part 7

MLS Listings on Net Sale Price
The bank wants to maximize its money on the sale of an REO property. It also wants your best efforts to sell the property. So, it will try to get you to agree to a commission on a NET sales price. Or, at the last minute, once you’ve presented an offer, then banks says “OK, but we have to cut the commission.”

2010 Forecast for CRE

Dr. Sam Chandan, President and Chief Economist of Real Estate Econometrics and an adjunct professor of real estate at the Wharton School of the University of Pennsylvania, recently gave a presentation on what he believes 2010 holds for the commercial real estate market. The upshot of his findings:

  • Though the economy remains fragile, we are beginning to recover from the depression scenario

  • The economy will need support the next few years

  • There will be some modest growth in spending in 2010

  • Multifamily is not faring well as the greatest demographic for renters is in the 21-29 year age range; this group is facing 16% unemployment and living back at home or pursuing advanced degrees

  • The real estate sector of the economy has declined sharply from 2007 highs

  • The first time home buyer program undercut the industry

  • NOI will stabilize over time; last recession it took 4 years to stabilize

  • Transaction activity will be primarily concentrated in the REIT sector and private buyers

  • Private buyers will be seeking properties in the $1-3,500,000 price range

  • Prices will stabilize and credit availability will be more robust

  • Retail operations will remain challenging

  • Still a disparity between buyers and sellers but the gap is narrowing

  • Investors waiting for the flood of distressed properties have been disappointed

  • FDIC has instituted a variety of programs to avert flooding the market

  • Lenders are exercising the extend and pretend option

  • The CRE section of the economy will revive with the creation of sustainable jobs

Dr. Chandan’s personal website is www.chandan.com.

HUD Flips Out

...and it's a good thing.

About REOs: Part 6

You are a broker/agent. You are desperate for listings. The only kinds of listings out there are bank REOs. The bank wants you - as part of the listing agreement - to do things like get the property professionally cleaned, arrange for repairs, watch over the repair professionals to make sure they get the job done right and on time, tell the repair people what to do that will maximize the re-sale value of the property, take care of the landscaping, stage the property, etc., etc. Oh, and front the money necessary to do these things, and submit expense reports on a monthly basis for reimbursement.

Catch a Wave

According to Housing in America: The Next Decade, a new research report authored by John K. McIlwain, senior resident fellow, Urban Land Institute/J. Ronald Terwilliger Chair for Housing, there are four major “demographic waves” that will affect the U.S. housing market in the next decade:

More 2010 Laws

AB 1046 – Effective January 1, 2010: Increase in Homestead Exemptions
Increase in Homestead Exemptions: Coming into effect on January 1, 2010, the homestead exemption protecting a homeowner's equity from judgment creditors has been increased by $25,000 across the board to $75,000 for individuals, $100,000 for married couples or family units as specified, and $175,000 for persons over 65 years, disabled, or over 55 years with limited income as specified.

AB 1061 – Effective January 1, 2010: HOA Landscaping Restrictions Limited

Low Water-Using Plants: Renders unenforceable any HOA provision prohibiting landscaping with water-efficient plants in common interest developments.

Investing in Tough Times

"It is clear the future holds great opportunities. It also holds pitfalls. The trick will be to avoid the pitfalls, seize the opportunities, and get back home by six o'clock." – Woody Allen.

Agent Beware

Short Sales are called that for a reason: somebody is going to take it in the shorts! Just be darn careful it’s not you (the agent).

What Brokers Need to Know About REOs/Part 3

BPOs and the Thorough Inspection
The bank listing agreement may call for the broker/agent to give opinions of value (BPOs). A BPO is an in-depth analysis of a property’s value. Think of it as a mini-appraisal. To do one properly, the broker/agent needs to thoroughly investigate the property’s condition.

“Just Enough...”

There’s a proposed Federal Program to assist Banks and borrowers (one of hundreds) by paying Banks $1 for every $2 a Bank writes off on a loan. Why ‘write off’ any part in the first place? Because many of these homes are worth less than the debt; they’re underwater (banks call this “negative equity”).

What Brokers Need to Know About REOs: Part 2

Welcome to the REO Business
How do you start? By getting to know your local bankers. (Note: most REO properties are coming from national banks, and bankers handling the mass volume of REO properties are just too busy and losing too much money to be friendly. So be persistent. And take donuts.)

Turkeys in the Straw

A mortgage broker who took out astronomical loans on behalf of “straw buyers” has been sentenced to a five-year term in federal prison (“the big house”) for the mortgage fraud scheme.

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